can some one please explain per diem pay??

its been a long time since i got the per diem pay. so, give it some time before anyone here can answer that for you.

 

http://www.thetruckersreport.com/tr...-participation-in-perdiem.html?highlight=diem

 

Let me start off by mentioning that I am not a tax professional, and the tax code changes all the time, so what I know may not be true come next tax season.

Per Diem is a deduction taken by a person who spends time away from home. The IRS assumes that you will spend $52 per day for 2006 on food on the road. You are allowed to deduct 75% of this number as a DOT regulated truck driver. This is for meals and incidental expenses. You count your time using your log books, and some people go as far as dividing up their day into quarters, some just count nights spent away from home. The last thing to mention is that this goes on schedule A of your personal tax return, so if you don't have enough other things to make itemizing worth your while you might not bother with it. For example: 200 nights spent away at 75% of $52 is $7800. The standard deduction that you will replace by itemizing is $5000 per person, $10000 for a couple married filing jointly, so the itemizable deductions have to be more than the standard deduction. If you have other itemizeable schedule A deductions it might work in your favor. Some medical expenses (not covered by insurance) and some types of Interest payments are the biggest things that add up quick on schedule A. The other thing that you may accumulate is un-reimbursed employee expenses such as tolls, lumpers, truck washes, repairs, etc that total more than 2% of your adjusted gross income.

If you want a more in depth answer I urge you to make an appointment with an H & R Block office. They give free advice, and most larger stores are open all year.

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So if your company offers per diem pay and doesn't stick you with un-reimbursed expenses this is what I suggest. Take the per-diem pay since it is tax free (assuming that it isn't MORE than your allowed per-diem deduction) and take the standard deduction on your taxes. You won't have to itemize deductions and keep track of much.

It will reduce the contribution to Social security. This may reduce your social security benefit at retirement IF social security is still around. I say that taking the extra tax free money and investing it in a Roth IRA that will earn interest that won't be taxed is a better deal anyway. You will have a lot more money to spend as you please at retirement. Social Security won't be enough to pay your living expenses anyway.

The above numbers apply if you do NOT take per diem pay from your employer. If you accept per diem pay then that is subtracted from the amount that you can deduct. If you receive per-diem pay then it is most likely in your best interest to simply take the standard deduction instead of keeping track of expenses. You will get that per-diem pay tax free more or less. The downside is that there will be less contribution to social security with this plan. IF social security is around by the time you retire you may receive a reduced benefit with this option.

My reasoning is that you could take the per diem pay and invest it in a roth IRA. A roth IRA earns interest and that interest will not be taxed when you take it out at retirement. I have not worked up all the numbers involved and if/when I get bored I'll post some real numbers.

 

Read the IRS guidelines and rates which are here IRS.gov Search Results

 

Rawlco got it pretty much right.

 

Some companies will pay you a set daily "per diem" rate meant to cover your expenses. It is NOT always based on IRS rates.

 

does .12 cents a mile sound good for per diem pay?
do you have a choice of taking it per check or at the end of the year? or does this vary by company?

 

This is more a benefit to a company, then a driver. You pay half of your social securty taxes and the employer pays the other half on each check. With per diem, it reduces the employers contribution to social securty, and you multiply that times lets say....1500 drivers, that big bucks!!!!

Plus as stated above it reduces what your paying into soicial security, reducing future benefits.....providing that program exsists when you need it.

 

from reading old threads on the per_diem thing, i think i will just save my reciepts and itemize at the end of the year.